Arbitration Weekly Round-Up: 1st January – 7th January
Ausaf Ayyub
12 Jan 2024 11:30 AM GMT
Supreme Court Arbitral Awards Cannot Be Modified Under Sections 34 & 37 Of Arbitration & Conciliation Act : Supreme Court Case Title: S.V. Samudram v. State of Karnataka Citation: 2024 LiveLaw (SC) 14 The Supreme Court has reiterated the settled position of law that any attempt to “modify an award” while adjudicating Sections 34 and 37 petitions is...
Supreme Court
Case Title: S.V. Samudram v. State of Karnataka
Citation: 2024 LiveLaw (SC) 14
The Supreme Court has reiterated the settled position of law that any attempt to “modify an award” while adjudicating Sections 34 and 37 petitions is not permissible under the Arbitration and Conciliation Act, 1996.
The Division Bench of Supreme Court comprising Justices Abhay S. Oka and Sanjay Karol while deciding a Civil Appeal filed by the Appellant against the judgment and order passed by the High Court of Karnataka under Section 37 (1) of the Arbitration and Conciliation Act, 1996, framed a question of law that:
“Whether the High Court was justified in confirming the order dated 22nd April, 2010 under Section 34 of the Arbitration & Conciliation Act, 1996 passed by the Senior Civil Judge, Sirsi, in Civil Misc. No. 08/2003, whereby the award passed by the learned Arbitrator was modified and the amount awarded was reduced.”
Delhi High Court
Case Title: MBL Infrastructure Ltd v. DMRC, OMP(COMM) 311 of 2021.
The High Court of Delhi has held that the Arbitral tribunal can award monetary compensation as damages for the delay attributable to employer even when the agreement provides for the extension of time as the only remedy to the contractor.
The bench of Justice Chandra Dhari Singh held that the tribunal cannot deny damages on the ground that the agreement provides only for extension of time, especially when the agreement has already been terminated by the employer and there is no occasion for the contractor to seek extension. It held that the tribunal, in such a situation, has to necessarily compensate the contractor in terms of unliquidated damages.
Case Title: MBL Infrastructure Ltd v. DMRC, OMP(COMM) 311 of 2021.
The High Court of Delhi has held that an Arbitral Tribunal can transgress the boundaries of the contract to grant relief to aggrieved party when the contract illegally restricts or does not provide for sufficient remedies.
The bench of Justice Chandra Dhari Singh held that in a situation which is not anticipated in the agreement, the tribunal can transgress the boundaries of the agreement and grant relief to the aggrieved party which it is rightfully entitled to. It held that the tribunal cannot withhold a relief merely because of the explicit provision for such a relief in the agreement.
Case Title: Union of India v. M/s Panacea Biotec Limited, FAO(OS)(COMM) 81 of 2020
The High Court of Delhi has held that non-mentioning of prayer renders the petition under Section 34 of the A&C Act as invalid.
The bench of Justices Suresh Kumar Kait and Neena Bansal Krishna held that without a prayer to set aside the impugned award, a petition cannot be considered valid as such petitions would merely amount to empty submissions without a relief.
The Court held that without a prayer, the Court cannot decipher the relief that a party is seeking on the basis of the averments made in the petition and without seeking relief, the petition is not maintainable rendering it non-est.
The Court emphasized that condoning the delay in re-filing the petitions beyond the prescribed period of 3 months plus 30 days would entangle arbitrations in a web of prolonged delays. Such a situation, the Court reasoned, would undermine the very purpose of opting for arbitration, rendering it meaningless.
Case Title: Union of India v. M/s Panacea Biotec Limited, FAO(OS)(COMM) 81 of 2020
The High Court of Delhi has held that under Section 34(3) of the A&C Act, the limitation period of 3 months plus 30 days in inelastic and inflexible.
The bench of Justices Suresh Kumar Kait and Neena Bansal Krishna explained that the challenge petition must be filed within 3 months from the date of the receiving of the award, however, a grace period of 30 days is given in which the Court can exercise discretion to condone the delay in the filing of the application. However, the court is left with no discretion to condone a delay in filing after the period of 3 months plus 30 days grace is over.
Section 34 Petition Is Non-Est If Filed Without The Arbitral Award: Delhi High Court
Case Title: Union of India v. M/s Panacea Biotec Limited, FAO(OS)(COMM) 81 of 2020
The High Court of Delhi has held that non-filing of the arbitral award along with the petition under Section 34 of the A&C Act is a fatal defect which renders the filing as non-est.
The bench of Justices Suresh Kumar Kait and Neena Bansal Krishna held that filing of an award along with the challenge petition is not an empty procedural requirement as sans the award, the Court is left absolutely clueless to comprehend the grounds taken in the objection Petition and thereby unable to decide whether the Petition merits Notice to be issued or outright rejection.
National Company Law Tribunal
Case Title: Bank of India v McNally Bharat Engineering Company Limited
Case No.: CP (IB) No. 891/KB/2020
The National Company Law Tribunal (“NCLT”), Kolkata Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Balraj Joshi (Technical Member), has upheld the Resolution Professional's decision to admit claim arising out of an arbitral Award as contingent claim, since proceedings under Section 34 of Arbitration and Conciliation Act, 1996 are pending before the High Court against the Award.
The Bench opined that the Arbitral Award is yet to attain finality as proceedings under Section 34 of Arbitration Act are pending before the High Court. Further, the admittance of principal amount as contingent liability is merely for the accounting purpose following the principle of Complete Disclosure. Thus, making a reversible accounting entry of principal claim as a liability does not mean the acceptance of the claim.
The Bench held that it would be premature to make a confirmed entry towards the claim or reverse it while the Award is under challenge before the High Court. The Resolution Professional's decision to admit claim contingently has been upheld.
